Highlights
■ Health and Safety: LTI frequency rate2 of 1.4x in 2016 compared to 1.0x in 2015.
■ Steel Shipments of 1,917 thousand tonnes in 2016, a 2% increase compared to steel shipments of 1,886 thousand tonnes in 2015.
■ EBITDA3 of USD 492 million, including a non-recurring charge of USD 11 million, in 2016, compared to EBITDA of USD 501 million in 2015.
■ EBITDA of USD 133 million, including a non-recurring charge of USD 11 million, in Q4 2016, compared to EBITDA of USD 124 million in Q3 2016.
■ Net income of USD 214 million in 2016, compared to net income of USD 172 million in 2015.
■ Basic earnings per share of USD 2.75 in 2016, compared to Basic earnings per share of USD 2.21 in 2015.
■ Cash flow from operations amounted to USD 417 million in 2016, compared to USD 392 million in 2015.
■ Free cash flow before dividend4 of USD 288 million in 2016, compared to free cash flow before dividend of USD 266 million in 2015.
■ Net debt5 of USD 154 million as of December 31, 2016, representing a gearing6 of 6% compared to a net debt of USD 316 million as of December 31, 2015, representing a gearing of 14%.

Aperam (referred to as “Aperam” or the “Company”) (Amsterdam, Luxembourg, Paris: APAM and NYRS: APEMY), announced today results for the three months and full year periods ending December 31, 2016


Timoteo Di Maulo, CEO of Aperam, commented:
“In 2016, Aperam achieved record financial results since the spin-off, with net income of USD 214 million and free cash flow before dividend of USD 288 million. This highlights the strong execution of our Leadership Journey®7 and Top Line strategy, reaching a solid balance sheet.

Looking ahead, we remain confident in the ability of Aperam to continue to improve its sustainable financial performance and its solid cash generation.

Therefore, we are pleased to announce a base dividend increase to USD 1.50 per share (subject to shareholder approval) as well as a share buyback program of up to USD 100 million.”

Prospects

■ EBITDA in Q1 2017 is expected to increase compared to EBITDA in Q4 2016.


■ Net debt to increase in Q1 2017.

Financial Policy - Cash Deployment

In coherence to its Financial Policy, Aperam is announcing 2 major actions regarding cash deployment:
■ Aperam increases its base dividend from USD 1.25 per share to USD 1.50 per share (subject to AGM approval).

■ Aperam announces a share buyback program of up to USD 100 million.


Financial Highlights (on the basis of financial information prepared under IFRS)

(USDm) unless otherwise stated
Q4 16 Q3 16 Q4 15 12M 2016 12M 2015
Sales 1,053 1,015 1,081 4,265 4,716
EBITDA 133 124 105 492 501
Operating income 83 81 65 317 327
Net income 58 54 33 214 172
Free cash flow before dividend 125 70 124 288 266
Steel shipments (000t)457 457 476 1,917 1,886
EBITDA/tonne (USD)291 271 221 257 266
Basic earnings per share (USD) 0.75 0.69 0.42 2.75 2.21

Diluted earnings per share (USD)0.70 0.65 0.40 2.59 2.09

Health & Safety results
Health and Safety performance based on Aperam personnel figures and contractors’ lost time injury frequency rate2 was 0.8x in the fourth quarter of 2016 compared to 1.8x in the third quarter of 2016.


Financial results analysis for full year period ending December 31, 2016

Sales for the year ended December 31, 2016 decreased by 10% at USD 4,265 million compared to USD 4,716 million for the year ended December 31, 2015, mainly due to lower raw material prices. Steel shipments in 2016 increased by 2% at 1,917 thousand tonnes compared to 1,886 thousand tonnes in 2015.

EBITDA was USD 492 million for the year ended December 31, 2016, including a USD 11 million non-recurring and non-cash charge related to the announced intention of divestment of the French Tubes units of Services & Solutions division, compared to EBITDA of USD 501 million for the year ended December 31, 2015. Despite headwinds coming from challenging market conditions in South America and Alloys Division, the company maintained its EBITDA level (excluding the impact of the non-recurring charge) in the year primarily due to the continuous contribution of the Leadership Journey®, the Top Line strategy and a strong performance of Services & Solutions as well as recovery of the stainless steel prices. The Leadership Journey® has continued to progress over the year and has contributed a total amount of USD 514 million to EBITDA by the end of 2016 since the beginning of 2011.

Depreciation and amortization was USD 167 million and impairment charges were USD 8 million for the year ended December 31, 2016.

Aperam had an operating income for the year ended December 31, 2016 of USD 317 million compared to an operating income of USD 327 million for the year ended December 31, 2015.

Net interest expense and other financing costs for the year ended December 31, 2016 were USD 43 million, including financing costs of USD 15 million. Realized and unrealized foreign exchange and derivative gains were USD 3 million for the year ended December 31, 2016.

The Company recorded a net income of USD 214 million, inclusive of an income tax expense of USD 63 million, for the year ended December 31, 2016.

Cash flows from operations for the year ended December 31, 2016 were positive at USD 417 million, including a working capital increase of USD 26 million. CAPEX8 for the year ended December 31, 2016 was USD 130 million.

Free cash flow before dividend for the year 2016 amounted to USD 288 million.

As of December 31, 2016, shareholders’ equity was USD 2,485 million and net financial debt was USD 154 million (gross financial debt as of December 31, 2016 was USD 479 million and cash and cash equivalents were USD 325 million).


The Company had liquidity of USD 778 million as of December 31, 2016, consisting of cash and cash equivalents of USD 325 million and undrawn credit lines9 of USD 453 million.

Financial results analysis for the three-month period ending December 31, 2016

Sales for the fourth quarter of 2016 increased by 4% to USD 1,053 million compared to USD 1,015 million for the third quarter of 2016. Steel shipments for the fourth quarter of 2016 were stable at 457 thousand tonnes compared to the third quarter of 2016.

EBITDA has increased over the quarter from USD 124 million for the third quarter of 2016 to USD 133 million for the fourth quarter of 2016. The fourth quarter EBITDA includes a non-recurring charge of USD 11 million, leading to an Adjusted EBITDA10 of USD 144 million for the fourth quarter of 2016 compared to an Adjusted EBITDA of USD 124 million for the third quarter of 2016. The seasonality in Brazil was more than offset by the seasonal recovery in Europe, the continuous recovery of the prices and the contribution of the Leadership Journey®.

Depreciation and amortization was USD 42 million and impairment charges were USD 8 million for the fourth quarter of 2016.

Aperam had an operating income for the fourth quarter of 2016 of USD 83 million compared to an operating income of USD 81 million for the previous quarter.

Net interest expense and other financing costs for the fourth quarter of 2016 were USD 9 million, including financing costs of USD 3 million. Realised and unrealised foreign exchange and derivative gains were USD 4 million for the fourth quarter of 2016.

The Company recorded a net income of USD 58 million, inclusive of an income tax expense of USD 20 million, for the fourth quarter of 2016.

Cash flows from operations for the fourth quarter of 2016 were positive at USD 163 million, with a working capital decrease of USD 9 million. CAPEX for the fourth quarter was USD 39 million.

Free cash flow before dividend for the fourth quarter of 2016 amounted to USD 125 million.


Operating segment results analysis

Stainless & Electrical Steel
The Stainless & Electrical Steel segment had sales of USD 883 million for the fourth quarter of 2016. This represents an 8% increase compared to sales of USD 819 million for the third quarter of 2016. Steel shipments during the fourth quarter were 452 thousand tonnes. This is a 3% increase compared to shipments of 438 thousand tonnes during the previous quarter. The volume increase was mainly due to the traditional seasonal recovery in Europe following the summer seasonal effect. Overall, average selling prices for the Stainless & Electrical Steel segment increased compared to the previous quarter.


The segment had EBITDA of USD 410 million (of which USD 286 million from Europe and USD 124 million from South America) for the year 2016 compared to USD 438 million (of which USD 243 million from Europe and USD 195 million from South America) for the year 2015. The Brazilian market has been challenging over 2016 due to macro-economic environment and foreign exchange effects which have been partly mitigated thanks to the Top Line strategy and Leadership Journey®. The strong performance of Europe over 2016 is mainly due to the continuous contribution of the Leadership Journey®, healthy demand in Europe and some stainless steel prices recovery during the second half of the year.


The segment had EBITDA of USD 117 million for the fourth quarter of 2016 compared to USD 102 million for the third quarter of 2016. The seasonality in Brazil was more than offset by the seasonal recovery in Europe and the continuous recovery of the stainless steel prices.

Depreciation and amortisation expense was USD 37 million for the fourth quarter of 2016.

The Stainless & Electrical Steel segment had an operating income of USD 80 million during the fourth quarter of 2016 compared to an operating income of USD 65 million during the third quarter of 2016.

Services & Solutions
The Services & Solutions segment had stable sales during the quarter at USD 472 million compared to USD 473 million during the third quarter of 2016. During the fourth quarter of 2016, steel shipments were 187 thousand tonnes compared to 189 thousand tonnes during the previous quarter. The Services & Solutions segment had higher average selling prices during the period compared to the previous period.

The segment had EBITDA of USD 82 million during the year 2016 compared to USD 42 million during the year 2015, due to better margins and shipments over the year as well as the absence of negative impact on inventories from the nickel price evolution compared to 2015.

The segment had EBITDA for the fourth quarter of 2016 of USD 12 million compared to EBITDA of USD 24 million for the third quarter of 2016. The decrease of EBITDA was primarily due to a non-recurring and non-cash charge of USD 11 million in relation with the fair valuation of a French stainless steel welded tubes unit which is held for sale.


Depreciation and amortisation was USD 3 million and impairment charges were USD 8 million for the fourth quarter of 2016.

The Services & Solutions segment had an operating income of USD 1 million for the fourth quarter of 2016 compared to an operating income of USD 20 million for the third quarter of 2016.

Alloys & Specialties

The Alloys & Specialties segment had sales of USD 108 million for the fourth quarter of 2016, representing an increase of 19% compared to USD 91 million for the third quarter of 2016. Steel shipments were higher during the fourth quarter of 2016 at 8 thousand tonnes compared to 7 thousand tonnes during the third quarter of 2016. Average selling prices decreased over the quarter.


The segment had EBITDA of USD 30 million for the year 2016 compared to USD 44 million for the year 2015. This is mainly due to the negative effects from raw material prices evolution, forex translation effects and some indirect headwinds from Oil & Gas related markets.

The Alloys & Specialties segment achieved EBITDA of USD 12 million for the fourth quarter of 2016 compared to USD 5 million for the third quarter of 2016. The increase in EBITDA was mainly due to market demand recovery and sales mix effects.

Depreciation and amortisation expense for the fourth quarter of 2016 was USD 1 million.


The Alloys & Specialties segment had an operating income of USD 11 million for the fourth quarter of 2016 compared to an operating income of USD 3 million for the third quarter of 2016.


Recent developments
■ On December 15, 2016 Aperam announced its financial calendar for 2017. The financial calendar is available on the Company’s website www.aperam.com, section Investors & shareholders, Financial calendars.


■ On January 9, 2017, Aperam announced its intention to divest Aperam Stainless Services & Solutions Tubes Europe, its French stainless steel welded tubes unit, after consideration of a binding offer it received on December 30, 2016.


■ On January 20, 2017, Standard & Poor’s Global Ratings affirmed the Aperam Corporate credit rating at BB+. At the same time, the rating agency revised its outlook to “Positive” from “Stable”.

New developments

■ On February 9, 2017 Aperam announced its detailed dividend payment schedule for 2017. The Company also proposes to increase its base dividend from USD 1.25/share to USD 1.50/share, subject to shareholder approval at the 2017 Annual General Meeting, as the company continues to improve its sustainable profitability benefiting from its strategic actions. The schedule is available on Aperam’s website www.aperam.com, section Investors & shareholders, Equity Investors, Dividends.

■ On February 9, 2017 Aperam announced a share buyback program of up to one hundred (100) million USD and a maximum of two (2) million shares under the authorization given by the annual general meeting of shareholders held on May 5, 2015. The details of the program are available in a separate Press Release.

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